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Online Store - The Great Inflation and Its Aftermath: The Past and Future of American Affluence
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List Price: $26.00
Our Price: $17.16
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Manufacturer: Random House
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Average Customer Rating:   
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Binding: Hardcover
Dewey Decimal Number: 332.410973
EAN: 9780375505485
ISBN: 0375505482
Label: Random House
Manufacturer: Random House
Number Of Items: 1
Number Of Pages: 336
Publication Date: 2008-11-11
Publisher: Random House
Release Date: 2008-11-11
Studio: Random House
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Editorial Reviews:
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It’s a giant gap in our history. The Great Inflation, argues award-winning columnist Robert J. Samuelson in this provocative book, was the worst domestic policy blunder of the postwar era and played a crucial role in transforming American politics, economy, and everyday life–and yet its story is hardly remembered or appreciated. In these uncertain economic times, it is more imperative than ever that we understand what happened in the 1960s and 1970s, lest we be doomed to repeat our mistakes.
From 1960 to 1979, inflation rose from barely more than 1 percent to nearly 14 percent. It was the greatest peacetime inflationary spike in this nation’s history, and it had massive repercussions in every area of our lives. The direct consequences included Ronald Reagan’s election to the presidency in 1980, stagnation in living standards, and a growing belief–both in America and abroad–that the great-power status of the United States was ending. The Great Inflation and Its Aftermath traces the origins and rise of double-digit inflation and its fall in the brutal 1981-82 recession, engineered by the Federal Reserve under then-chairman Paul Volcker and with the staunch backing of Reagan.
But that is only half the story. The end of high inflation triggered economic and social changes that are still with us. The stock market and housing booms were both direct outcomes; American business became more productive–and also much less protective of workers; and globalization was encouraged.
We cannot understand today’s world, Samuelson contends, without understanding the Great Inflation and its aftermath. Nor can we prepare for the future unless we heed its lessons. This incisive and enlightening book will stand as the authoritative account of a watershed event of our times.
Praise for The Great Inflation and Its Aftermath
"Newsweek and Washington Post columnist Samuelson is one of the rare journalists who debates politics and economics with a healthy skepticism toward conventional wisdom. Politicians would do well to study [the errors] the past that teach that choosing quick fixes only delays and worsens the inevitable.”– Booklist
"If you want to understand the economic events of the last half century, you should read. . . Robert Samuelson's The Great Inflation and Its Aftermath: --U.S News & World Report.
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Spotlight customer reviews:
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Customer Rating:
Summary: I don't think Samuelson knows what he is talking about.
Comment: I don't think Samuelson knows what he is talking about. He is not an economist, although one could easily get the impression that he is from the book. But, I'm not one either. Nevertheless, despite his occasional denials, the reader quickly gets the impression that inflation has been THE story of economic history in the later 20th century. His message is only too apparent: inflation causes pain, disinflation causes prosperity.
I just don't think that point of view stands up to scrutiny. I see that uncertainty in the value of money creates problems for investment - e.g. volatility in inflation. But, this is clearly NOT what Samuelson is saying. It appears to me that a predictable lack of inflation is a big problem because it allows the capitalists to sit back and not have to worry too much about their pile getting diluted out. Or, more to the point, it allows them to leverage up their pile into a mountain made out of the meager holdings of the middle class. Conversely, predictable inflation - of nontrivial quantity - creates tremendous pressure on the capitalists to use their money in ways that generate returns - e.g. use it or lose it.
On the other side of this, we have seen the predictable results of disinflation in the growth of the Gilded Age during the long 2:1 deflation that took place after the Civil War until about 1907. This was a period, like our own, in which America became two nations - the struggling poor - at the time, especially in agriculture - who desperately needed soft money, and the "respectable" voices of the East Coast capitalists who controlled all the wealth and argued for hard money to entrench their already privileged position.
It ended badly, just as our present crisis is going to end badly. As always in American history when an economic crisis comes along, the rich get to come to bat first and their predictable actions are to defend the currency(and indirectly their wealth) and deplore the excesses - most notably of the debtors. It is always too late for their stiff medicine to be helpful, and great suffering is the consequence. Eventually, when all aforementioned "respectable" avenues have been exhausted, the progressives get their chance with a binge of soft money. And, that fixes things at the expense of turning the social order upside down with further suffering.
Frankly, I think we'd be a lot better off right now if Reagan/Volcker had not squished inflation so severely and destroyed the labor unions and middle class wages with it. Sure, they had to do something, but that's a far cry from the carpet bombing campaign that they unleashed. It really opened the door to the present crisis.
Unfortunately, this is pretty much the opposite of what Samuelson is saying. I recommend an alternative book for the interested reader, "Money: Whence It Came, Where It Went" by the progressive economist John K. Galbraith.
Customer Rating:
Summary: Mangled Thinking
Comment: Robert Samuelson's simple thesis is that the great inflations of the 70s were caused by misguided government policies, and that it took the Volker high interest rates and a severe recession of the 81-82 to cure that. He also claims that the prosperity and the low inflation of 80s, and 90s are due to this "cure." While these might be true, he did not make the logical connection in the book. Just as is typical of his column in the Newsweek, the thinking is muddled, the presentation is full of narratives but short on analysis and real insight. Claims are made about cause and effect, yet no linkage is established. For example, he details the history of the 60s and 70s economic policy, but somehow fails to demonstrate how these led to the inflation (other than claiming too much money is being created with no data being shown on M1 and M2 etc.). Similarly, after describing the 81-82 recession, he then goes on to describe how the 80s were more prosperous, more global, with more competition, etc. These are true, but the problem is that he attributed it almost ALL to disinflation. However, there was no clear connection on WHY it is caused by the Volcker - Reagen high interest rate policy. Actually, one can easily claim it is the cheap imports and free trade that kept inflation low, as did Alan Greenspan. So it could be globalization that killed inflation, instead of disinflation caused globalization as Samuelson claims. There is also a lack of real explanation why it is disinflation, instead of deregulation and Reagen tax cuts that caused the 80s to be more prosperous. All the book does is just keep on describing the 80s and 90s and somehow we should be convinced that it is because the geniuses of Reagen and Volcker. Samuelson is better on writing about economic history, but this book is not where I would look for real thinking about the role of inflation.
Customer Rating:
Summary: Somewhat Interesting; Also Confused and Sometimes Tedious
Comment: Samuelson believes "The Great Inflation" (1960s-1970s) was the worst domestic policy blunder of the postwar economy. From 1960 to 1979, inflation rose from barely more than 1% to nearly 14%. Direct consequences included Reagan's 1980 election, stagnation in living standards, and a growing belief that the great-power status of the U.S. was ending. The stock market stagnated, with the DJIA no higher in 1982 than 1965. It also undermined hard work, savings, and planning ahead. The subsequent stock market, globalization, and housing booms were all encouraged as a result. Only the savage recession of 1981-92, when unemployment reached nearly 11%, ended the problem.
Samuelson also contends that the Vietnam War and rising energy prices were not key contributors - pointing out that inflation did not end with the war, and presenting data showing only a limited impact of energy price hikes.
Samuelson also contends that the S&L crisis was caused by rising rates for deposits (due to inflation), vs. steady mortgage rate returns. (Ill-conceived projects such as malls, resorts, housing projects also were a problem, per Samuelson. However, William Seidman, former chairman of both the Federal Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation, believes "The banking problems of the '80s and '90s came primarily, but not exclusively, from unsound real estate lending." Perhaps Samuelson also believes that absent the squeeze between lending and borrowing rates, S&Ls would not have pursued such risky endeavors.)
Regardless, the "Great Inflation" started with President Kennedy and his belief that a stronger economy would improve our Cold War performance vs. the U.S.S.R. (Sputnik had just been launched), combined with a belief that the business cycle could be tamed via judicious use of the Phillips' Curve - eg. selecting a balance of 3% unemployment and 4.5% inflation. Unfortunately, workers then demanded both COLA and higher wages (passing inflation risk to others), pushing inflation even higher. Additionally, the Federal Reserve consistently overestimated productivity growth for most of the 1970s, leading them to add too much to the money supply.
The third problem was that personal political pressure by LBJ, Nixon, and Congress pushed the Fed to short-circuit efforts to tamp down inflation. Reagan, however, had campaigned on tightening the money supply, and provided the political cover for Paul Volcker to do so, despite industrial production dropping 12% from mid-1981 to late-1982. The resulting capacity surplus and deregulation via Carter created eg. new non-union trucking companies and less pattern-bargaining overall.
At this point Samuelson somehow gets cause and effect confused, concluding that the Volcker-Reagan recession led to accelerating globalization, increasing stock-market pressure for results (via LBOs fueled by low interest rates), and the stock-market and housing bubbles via low interest-rates associated with low inflation. Most others, however, believe that globalization held down inflation and was the primary force for increased productivity (and quality). (Samuelson also makes the interesting point that increased trade was initially seen as a means of thwarting Communism and preventing another Depression.) Further, the Federal Reserve bailouts after the S&L, LTCM/Russian ruble and Mexican peso failures simply convinced investors that the government would not allow either the stock market or major corporations to fail.
Customer Rating:
Summary: Disappointing
Comment: Would not recommend it. Rather tedious and not as informative as I had expected. Moreover the writter's style is not to my liking.
H.W.Hallman
Denver, CO
Customer Rating:
Summary: A good book but not quite a great one
Comment: If, as Robert J. Samuelson asserts, the "Great Inflation" has largely been forgotten, then this book renders an important service. It is hard for someone who lived through the years and events recounted here to believe that they have been forgotten, but perhaps it's so. Samuelson's book is generally excellent, but there are some problems: 1. The basic historical narrative is not as coherent as it might be. A more precise chronology of the development of inflation is needed. Too often the reader is taken through a decade or two of developments in one area too quickly to really understand them, and then transported back again 20 years to follow another train of events. In part this is because of the topical arrangement of the first three chapters, which might better have been combined into a single, slower chronological narrative. 2. The book does not explain in sufficient detail why inflation is so pernicious and wreaks such havoc. No-one who lived through the period doubts the evil of inflation, but a quote from Keynes and some anecdotes are not enough to demonstrate the point. 3. While endorsing the basic insight of Milton Friedman and other "monetarists" that inflation is a monetary phenomenon, the book also concludes that it was the fiscal policy of Kennedy's Keynesian economic advisors that first caused it. Both can't be entirely true, and the tension is left unresolved. Does monetary policy cause inflation or merely accomodate it? If inflation is purely monetary, why does it take a severe recession in the "real" economy to extinguish it? In short, the book does not enable the reader to understand the relationship between fiscal and monetary policy, between the real economy and the money supply, between inflation and production. This may be asking too much of it, as it is not clear that the science of economics can do this: it arguably has yet to produce such a "unified field theory". That it hasn't, and that economists themselves may not fully understand the causes of economic events, is a scary aspect of the current (Dec. 2008) scary situation. As Samuleson notes, economists' professional hubris was (or should have been) punctured by the Great Inflation; we don't need a second Great Depression to reinforce the point. The shortcomings noted herein give rise to more than just quibbles, but they should not deter you from reading this fine book, which is a first-rate piece of economic history.
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